Proforma invoice vs invoice: what actually changes

The difference in one table

The two documents are not alternatives. In most sales they follow each other: the proforma fixes the deal, the invoice records it once it happens.

When each document is issued

A typical sale between two businesses runs in this order:

1. Enquiry and quotation. The buyer asks for a price; you answer with a quotation. See proforma invoice vs quotation.
2. Proforma invoice. The buyer is ready to commit, or needs a formal document for a bank, an import licence or an internal approval. You send the proforma with the final lines, the currency, the delivery terms and a validity date.
3. Order or deposit. The buyer signs the proforma, sends a purchase order or pays the advance it requests.
4. Delivery. The goods leave with a delivery note, or the service is performed.
5. Invoice. You issue the invoice, numbered in your invoice series, with the tax the law requires.
6. Receipt. When the money arrives, you confirm it with a receipt.

If the deal falls through after step 2, nothing needs to be cancelled in your accounts: the proforma simply expires on its validity date.

Proforma invoice vs tax invoice

In countries with VAT or GST, “tax invoice” is a defined document: the law lists what it must contain and when it must be issued, and only a valid tax invoice lets the buyer claim back the tax. A proforma does not have to meet those rules, and it cannot replace them.

• India. Section 31 of the CGST Act sets out when a tax invoice must be issued, and the CGST Rules list its particulars. A proforma is a commercial document outside that framework: no GST becomes due because of it, and the buyer cannot claim input tax credit on it. Details on our India page.
• Kenya. Tax invoices must go through the KRA’s eTIMS system. A proforma is not a tax invoice and does not go through eTIMS. See proforma invoice in Kenya.
• Nigeria. VAT is charged at 7.5% on the VAT invoice; the proforma only shows the VAT the buyer will pay. See proforma invoice in Nigeria.

A simple line avoids any confusion: “This is a proforma invoice, not a tax invoice.”

Electronic invoicing applies to invoices, not proformas

More and more countries require invoices to be reported to the tax authority in real time: India’s e-invoicing system for businesses above ₹5 crore of turnover, Kenya’s eTIMS, and similar systems elsewhere. These rules target the tax invoice. A proforma, a quotation or a delivery note stays an ordinary document, usually a PDF.

InvoiceProforma produces PDF documents and is not connected to any e-invoicing system. If your invoices must go through one, keep using it for the invoice itself, and use the proforma for everything that happens before.

Turning the proforma into the invoice

When the buyer accepts, the invoice should repeat the proforma: same buyer, same lines, same prices, same currency, same terms. Differences are where disputes and bank refusals start. What changes:

• the title, from “Proforma invoice” to “Invoice” or “Tax invoice”;
• the number, taken from your invoice series, never from the proforma series;
• the date, which becomes the invoice date;
• the tax, now actually charged where you are registered;
• any advance already paid, deducted from the amount due.

In InvoiceProforma, one click turns an accepted proforma into an invoice with the same lines and currency, numbered in your invoice series. Payments recorded as receipts then show on the invoice as paid, with the balance due.

Five common mistakes

1. Numbering the proforma in the invoice series. It leaves a gap or a phantom sale in your records.
2. Forgetting to issue the invoice after a deposit. The buyer has paid against an offer; your accounts still show nothing.
3. Changing the description between the two documents. Banks and customs compare them line by line.
4. Treating the proforma total as tax already charged. The tax on a proforma is for information; it is due on the invoice.
5. Leaving out the validity date. Without it, a buyer may come back months later expecting the same price.